Banks shift focus from monitoring to claiming stablecoins

The passage of the GENIUS Act in July 2025 gave US banks a federal green light to issue payment stablecoins. Across the Atlantic, European institutions are making similar moves, with BNP Paribas joining a consortium to launch euro-denominated stablecoins by 2026.

From observation deck to trading floor

The GENIUS Act created a full regulatory framework that includes reserve requirements, anti-money laundering compliance, and restrictions on yield, essentially making stablecoin issuance look a lot like the kind of regulated activity banks already understand.

Citigroup estimates the stablecoin market could balloon to somewhere between $0.5 trillion and $3.7 trillion by 2030. Projections suggest that stablecoin growth could displace between $182 billion and $908 billion in traditional bank deposits by the end of the decade.

The technology play behind the strategy

Banks are increasingly exploring tokenized deposits and stablecoin-adjacent services designed to offer programmable, real-time payments. Programmable payments mean that transactions can carry embedded logic. A stablecoin payment could automatically execute when certain conditions are met, like releasing escrow funds once a shipment is confirmed, or splitting revenue among multiple parties instantaneously.

BNP Paribas, one of the largest banks in the eurozone, joining a consortium to create euro-backed stablecoins signals that this isn’t a US-only phenomenon.

Regulatory guardrails are still being built

The Treasury Department and FinCEN are currently proposing AML regulations specifically tailored to stablecoin issuers, with rulemaking expected to be finalized by April 2026.

The yield restrictions embedded in the GENIUS Act are worth watching closely. Unlike DeFi protocols that can offer attractive returns on stablecoin deposits, bank-issued stablecoins face constraints on how much yield they can pass through to holders.

What this means for investors

Tether and Circle have dominated the stablecoin market largely because traditional finance chose not to compete. The projected deposit displacement of up to $908 billion suggests that some institutions will emerge from this transition as winners while others, particularly smaller banks without the resources to build stablecoin capabilities, could face meaningful funding pressures.

Investors should be watching which banks announce stablecoin pilots, which blockchain networks they choose to build on, and how the April 2026 rulemaking deadline shapes the competitive playing field.

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